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2.6 The Seaworthiness of the Vessel The Owner must deliver the ship to the Charterer in a perfect condition of seaworthiness. To the Charterer it is not enough that the ship is seaworthy at her delivery but that she remains seaworthy during the whole chartering period. BALTIME (Clause 3, Owners’ Obligations): ".... and maintain her in a thoroughly efficient state in hull and machinery during service". GENTIME (Clause 11, Owners’ Obligations): “…… and shall exercise due diligence to maintain the Vessel in such Class and in every way fit for the service throughout the period of the Charter Party”. NYPE 93 (Clause 6, Owners to Provide): “…. Shall maintain the Vessel’s class and keep her in a thoroughly efficient state in hull, machinery and equipment for and during the service, …..”. This clause must be very specific in case of a long term charter agreement and the necessary details about the seaworthiness of the vessel must eventually be given in a additional clause. In this respect, reference must also be made to other clauses which deal with the liability in case of damage to the vessel and possible responsibilities and exceptions. (See also GENTIME, Clause 18, Responsibilities and Clause 19, Exceptions, BALTIME, Clause 12, Responsibility and Exceptions.) See also BALTIME for a worked-our Baltime Charter Party (Figure 2.12). In any case, the seaworthiness of the vessel is one of the “warranties” on which the Owner cannot withdrawn from unless the charter party states to the contrary. According to Clause 12 of the BALTIME and Clause 18 of the GENTIME, the Owner is responsible for damage to the cargo if before and at the beginning of each voyage he did not exercise due diligence to make the vessel seaworthy. This is in agreement with the Hague-Visby Rules (Article III, 1°). How can the Owner prove that he exercised the necessary diligence to make his ship seaworthy? H should especially consider following points: - Make sure that all ship’s documents are valid and that they are on board. The national (Certificate of Seaworthiness where applicable) the international certificates of safety (Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, Cargo Ship Safety Radio Certificate, International Load Line Certificate, etc.) Certificate of Registry, International Tonnage Certificate, Classification Certificates, Ship’s Articles, etc. (See also paragraph Ship’s Documents and Certificates in the site maritimeknowhow.com.) - See to it that the ship is equipped to start and to terminate the voyage. This encompasses: - the voyage planning;

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- that the necessary charts and sailing instructions (pilot books, Lists of Lights, etc) are on board and properly corrected; - that the Notices to Mariners are on board so that the charts and other nautical publications can be corrected. If the necessary charts for the voyage are not corrected, than the Charterer will consider the vessel as not being seaworthy. - give the master the necessary instructions about the points which must be entered in the log book and which are related to all the precautionary measures and proceeding which must be taken before loading and before leaving the harbour. With regard to the loading, all holds and hatch covers must be thoroughly inspected, the bilges and the loading gear must be tested, etc. Before the departure of the vessel, the master must check if the full crew is on board, if there are no stowaways on board, if the nautical instruments on the bridge are fully operational, if everything is in order in the engine room and with the radio equipment, if there are enough provisions on board, etc. In a word, ensure that everything is on board and in order to reach the next harbour. (See in that respect the “Company Regulations” or “Instructions to Masters” and Formalities on Departure in the site maritimeknowhow.com..) When, in case of damage to the goods, the responsibility can not be determined, the Charterer can ask for the assistance of a “P & I Club for Charterers” namely, the “Intern Club New York Produce Exchange Agreement” who will then negotiate with the Owner’s P & I Club. In most cases a 50/50 arrangement is strived at. 2.5.5 The Physical Condition of the Vessel Clause 7, Re-delivery of the BALTIME prescribes the following: "The vessel shall be re-delivered on the expiration of the Charter in the same good order as when delivered to the Charterers (fair wear and tear excepted....". Clause 5, Bunkers of the BALTIME also prescribes: "The Charterers at the port of delivery and the Owners at the port of re-delivery shall take over and pay for all fuel oil remaining in the vessel's bunkers.....". (See also Clause 6, Bunkers and Clause 4, Re-delivery of the GENTIME.) Since the ship has to be re-delivered to the Owner in the same physical condition (re construction and spare parts of the vessel), thus in the same condition as she was delivered (wear and tear excepted), a contradictory inspection will be made when the ship is handed over. This inspection will be made by two experts (or surveyors) one by order of the Owner and one by order of the Charterer. The report which they drawup is called “On-charter survey” or “On-hire survey”. The report which they draw-up at the re-delivery of the vessel is called “Off-charter survey” or “Off-hire survey”. The experts signs the report for the Owner and for the Charterer: “On behalf of the Owner/Charterer”. See hereunder a model of an On-hire Survey Report.

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The report gives all specifications concerning the general condition of the vessel and the possible damage which was assessed, together with the stevedore’s report regarding possible damage which has been assessed by the master (see also GENTIME, Clause 16, par. (b), Stevedore Damage). The report can also be completed with a “Fuel oil” and or “Fresh water” report. The report also indicated the quantity of fuel remaining on board and sometimes it gives the conditions for taking over this fuel. ON-HIRE SURVEY REPORT I, Capt. ..., Master Mariner Surveyor (at the Commerce Court of ...), went on board of the m.s. "......................." at the request of Messrs. ........, shipbrokers at ...., and on behalf of Messrs........, Time Charterers, for the purpose of noting her physical condition and to check surplus bunkers at the time of the vessel going "on hire", whilst she was afloat at berth nr ......, in the port of ..... ................2006 Proceeded to the vessel and noted as follows: NE in Lloyd's Register: ..... Call sign

: .....

Description of the ship:

Documents Classification survey : ..... issued : ..... valid : ..... Load-line re-assignment issued : ..... valid : ..... (Other certificates viz.: of seaworthiness, cargo gear, deratting, dry docking): Cargo capacities Compartment

Grain cu.ft

Bale cu.ft

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.......

.......

.......

Cargo gear Derricks: ........ Winches: ........ The survey was done in conjunction with : ................... ................... representing the Owners General Conditions (re weatherdeck, hatches, tweendecks, lower holds etc.) Details of Damage Noted. ................... ................... Bunkers At 16.30 hours on the .....1990 the following bunkers were sounded in conjunction with the Chief Engineer, Mr ............., and found to be on board: ..... litres ..... litres ..... litres -----------..... litres ...... M.T. S.G. 0,875 This survey was made under reserves as to any hidden, concealed or undiscovered damage or defects in the holds, stowage spaces, loading gear or such other hull structures extant at the time of the survey. The undersigned declares, that at 20.15 hours on the ...... 1990, the cargo holds were swept clean, and the vessel ready to load and in every way fitted for ordinary cargo service and in apparent good order, fair wear and tear excepted. THE SURVEY WAS DONE WITHOUT PREJUDICE On-charter survey

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A similar report can be drawn-up at a “Off-charter survey”. The physical condition of the ship is usually done on sight. The surveyors give a general appreciation of the vessel and particularly regarding the condition of the hull, the weather deck, the bulwark, the hatch comings, the hatch sealings with a possible hose test, the condition of the holds (lower holds and tweendecks) and in particular, the ladders, the cargo battens, the floor ceilings, the testing of the bilges, the loading gear, etc. In principle, the surveyors will only inspect what could possibly be damaged by the Charterer. Possible defects will be described in detail. Large rust spots will also be noted. With relation to the engines, the “Fuel Report” or “Bunker Delivery Note” and eventually the “Fresh Water Report” will be checked. The surveyors will also check all the vessel’s certificates and in particular note their date of delivery and of expiration. Afterwards, on the basis of the vessel’s documents, all specifications regarding the vessel such as the tonnage, the capacity, et al, will be entered in the report. They will also take the draft of the vessel, together with the weights that remain on board (especially fresh water and ballast) in order to determine, with some degree of precision, how much fuel still remains on board. However, the correct quantity of fuel remaining on board will determined by means of the sounding which were entered in the engine log book (preferably under the supervision of the surveyors) so that the draft will mainly serve as a good control. Note Regarding the remaining fuel on board, it is advised to segregate it in one or several tanks so that new fuel which will be embarked by the Charterer will not be mixed with the old fuel. Mixing fuels of different qualities may lead to chemical reactions, resulting in asphalt or a certain deposit in the fuel. The draft will also be a good indication of the vessel’s constant. At the “off-hire”, the Charterer must pay for possible damage to the vessel. Therefore, in case of stevedoring damage, the master must inform the Charterer immediately (via the agent) so that the Charterer can file a claim on the stevedore. Wit regard to the fuel consumption, it is important to specify the correct time and place of delivery and of re-delivery of the vessel; also with regard to when the Charterer has to pay (or not to pay) the hire and when the “on-hire/off-hire survey” has to take place. In every charter agreement, this is clearly specified, e.g. “….. afloat at berth in Liverpool”, “At A1 Pilot Station”, “….. in Demey Locks at Ostend”. 2.6.6 Operating Restrictions of Vessel Under a time charter, the Owner only takes care of the technical and nautical operation of the vessel, while the Charterer takes care of the commercial operation of the vessel. The commercial operations are, however, attached to some conditions; See for instance the GENTIME, Clause 2, Trading Areas and the BALTIME, Clause 3, Trade.

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- Geographical limits, excluded ports and places. These are the so-called “Institute Warranty Limits” i.e. regions or areas which are excluded by the “Underwriters” to prevent damage to the vessel or even its loss. If the vessel sails outside the allowed limits, the master must immediately inform the Owner, who will then contact the Charterer in order to arrive to an agreement such as the payment of an extra insurance premium. If the Charterer obliges the master to go to a harbour which lays in an excluded area, then he must refuse this categorically. If the Charterer insists, then the master must inform the Owner at once and wait for his instructions. It is possible that the Owner and the Charterer entered into a new agreement without the master’s knowledge. The master may, under no circumstance, refuse to load the vessel and after completion to leave the harbour and sail to the (so-called) excepted harbour, because the Charterer may than put forward that the vessel has been unnecessary held up under the pretence that he was negotiating to indicate another (allowed) port of discharge. The days during which the master may have refused to load or during which he remained in the harbour will be considered as “off-hire” by the Charterer and the Owner will not receive any hire money for these days. - The vessel must be used for lawful trades. - The vessel may only carry lawful merchandise. The vessel may e.g. not carry weapons or drugs. - The vessel may not carry excluded commodities. Every time charter agreement has a clause (and usually also an additional clause) showing a list of “cargo exclusions” e.g. livestock, explosives, scrap, sulpher, pitch-in-bulk. It is the Owner who specifies these “excluded cargoes” and the Charterer must apply this to the letter because excluded commodities may cause a lot of damage to the vessel which will have to be paid by the Charterer. - The vessel may only call at safe ports. The vessel must always remain afloat except if “naabsa”-ports are allowed. Harbours where there’s an epidemic or which are unreachable due to ice are also excluded. - In normal circumstances the vessel has to sail at the usual cruising speed without damaging the engines. 2.6.7 Payment of the Hire Under a time charter agreement, the hire always has to be paid in advance. The means of payment can be agreed on between parties. Example -

X $ / T / month (usually on summer freeboard) X $ / T / day X $ / M3 / day (for gas tankers).

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- Every 30 days (or calendar month) (BALTIME, NYPE). - Half-monthly. - Per day (GENTIME, NYPE). To meet possible price fluctuations due to inflation, devaluation, exchange rate variations, a “Monetary Clause” is usually included in the time charter agreement. 2.6.7.1 Inflation In the past, long term charter parties were fixed on the basis of a fixed time charter rate. To meet the sometimes heavy inflations, there is a growing tendency to foresee a price adaptation in long term charter parties. The operating costs of the Owner which can be influenced by inflation are: -

ship’s stores or victualling; wages; maintenance of the vessel; administration costs.

Therefore, in long term charter agreements, a “Index Clause” or “Escalator Clause” or a “Adjustment Rate of Hire Clause, ARH” is included. 2.6.7.2 Adjustment Rate of Hire Clause The Adjustment Rate of Hire, ARH can be calculated by means of following formula:

In this formula, X + Y + Z is equal to the total hire. W represents the new monthly wages of the personnel on board and Wo those wages at the signing date of the charter party. S represents the monthly administration costs (or the monthly wages of the staff ashore) and So those wages at the signing date of the charter party. X, Y, Z, each represent a certain percentage of the hire, where X is considered as a fixed amount (which e.g. will not fluctuate through inflation), while Y and Z, both represent variables; e.g.: X = 75% Y = 15% Z = 10%

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Example Suppose that the monthly hire of a vessel is equal to $ 12,500 per month. The wages of the sailors increase by 10% and the wages of the staff ashore remain unchanged. How much will the ARH be ? We take as basis: X = 75%, Y = 15% and Z = 10% so that the new wages of the sailors will be equal to $ 20,625 and: ARH = 93,750 + 18,750 x (20,625 / 18,750) + 12,500 or ARH = 93,750 + 20,625 + 12,500 = $ 126,875 Conclusion An increase of 10% in the variable part Y (= 15%) will increase the total hire by 1,5%. The Charterer will always try to obtain a fixed hire of 100% which is to the disadvantage of the Owner because he will not be able to apply an adjustment for inflation and on a middle or long term he will suffer a loss. On the other hand, The Owner will try to keep the fixed part of the hire (thus X) as low as possible and the variable parts (Y and Z) as high as possible so that in case of inflation he will not suffer any loss or even make a profit. 2.6.7.3 Escalator Clause Some Owners only want to fix long term time charter agreements (for more than one or two years) on condition that the Charterer agrees to include an “Escalator Clause” in the charter party. If the fixed costs (as mentioned above) increase with a set percentage, then the monthly hire (or the remaining period or the next year) will be increased with that same percentage. Usually a standard of 5% is applied. To that end, BIMCO introduced the following clause: “Escalator Clause” This clause was used in the past and may now be obsolete. “The rate of hire agreed in this charter is based upon the level of owners’ monthly operating expenses ruling at the date of this charter as shown in the statement for future comparison attached hereto, including provisions, stores, master’s and crew’s wages, war bonus and other remuneration, maintenance and usual insurance premiums. By the end of every year of the charter period the average monthly expenses for the preceding year shall be compared with the basic statement attached hereto. Any difference exceeding 5 per cent to be multiplied by 12 and regulated in connection with the next hire payment. The same principle to apply pro rata at the termination of the charter for any part of the year.”

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2.6.7.4 Devaluation or Realignment of Exchange Rate To meet a possible currency devaluation, long time agreements and in particular the “tanker time charter parties” include a “Currency Clause”. Currency Clause ”It is mutually agreed that the monthly hire due under Clause ....... is based upon the mean of the present Bank of England's selling and buying rate for the U.S. dollar, viz: $ ...... to the Pound Sterling. Should this mean rate fluctuate it is understood and agreed that the Sterling hire payments shall be adjusted upwards or downwards and the amount actually payable in Sterling shall be the hire calculated at the agreed rate in Sterling of ....... multiplied by $ ....... and divided by the new mean rate in force on the due date of payment.” For the tanker trade, Intertanko introduced the following “US Dollar Exchange Rate Clause” and “Currency Clause”. This clause was also used in the past and may now be obsolete. The currency used today in Belgium, France, Germany, etc. is the Euro. Intertanko “U.S. Dollar Exchange Rate Clause” “(For Incorporation in charter for medium or long periods, fixing the charter hire in U.S. dollars.) 1. The charter hire to be paid under this charter party shall be subject to quarterly adjustments on account of changes in the exchange rate value of one U.S. dollar as expressed in the following Selected Currencies set out under 2a. 2. a) Basic Exchange Rates shall be the arithmetical average of exchange rates for the Selected Currencies against the U.S. dollar quoted on the 1st, the 7the, the 14th and 21s of the three calendar months immediately preceding the date of this charter party. These rates are: FRENCH FRANC.....,JAPANESE YEN.....,POUND STERLING......., GERMAN MARK....., NORWEGION KRONE......., ............------.......... b) Quarterly Average Exchange Rates shall be the arithmetic average of the exchange rates for each of the Selected Currencies against the U.S. dollar quoted on the 1st, the 7th, the 14th and 21st of three calendar months immediately preceding the 1st January, the 1st of April, the 1st of July and the 1st of October, respectively. c) The exchange rates to be applied under this Clause shall be the mean of the opening buying and selling spot exchange rates in respect of the telegraphic transfer for the Selected Currencies into U.S. dollars as quoted by the First National City Bank in London. d) If on the dated referred to in these Clause all or some of the exchange rates in question are not quoted by the First National City Bank in London, the rates on the

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first day of quotation thereafter as set out in paragraph 2c) for each of the Selected Currencies shall be used. 3. a) On 1st January, 1st April, 1st July and 1st October in each year the respective Quarterly Average Exchange Rates for each of the Selected Currencies against the U.S. dollar shall be Ascertained and the percentage increase or decrease as compared to the Basic Exchange Rates shall be rounded off to two decimals only. b) If it is found that the arithmetic average of the percentages of increases or decreases of the selected currencies compared to the U.S. dollar amounts to two (2) whole percentage points or more, all charter hire instalments falling due under this charter party in the month when the calculation is made and the two following months, shall be increased if the U.S. dollar is weakened, or decreased if the U.S. dollar is strengthened, by that percentage/the half of that percentage. c) The provisions of this Clause shall not apply to any charter hire instalments falling due in the first year/the first six months of the period of this charter party. Adjustment may immediately thereafter be made in accordance with the latest quarterly exchange rates. Delete/ complete as appropriate.” INTERTANKO Currency Clause 1) It has been established by Owners and Charterers that on the date of this fixture the Exchange Rates of 9 selected currencies against the U.S. Dollar are as set out in Attachment” A” hereto. 2) a) Owners and Charterers agree that on the 1st of January, the 1st of April, the 1st of July and the 1st of October in each year the mean of buying and selling spot exchange rates in respect of telegraphic transfers for the 9 selected currencies into U.S. Dollars, as quoted by the First National City Bank in London at 10.30 a.m. local time, shall be rechecked and the percentage increase (+) / decrease (-) in the rates of exchange for each individual currency against the U.S. Dollar as compared to the Exchange Rates set out in Attachment “A” shall be calculated to two decimals only. b) If for one or more of the currencies in question two or more exchange rates for different kind of transactions are quoted, the one used in the calculation under this clause shall be the exchange rate quoted for import and export. If on the dates mentioned all or some of the exchange rates in question are not quoted by the First National City Bank in London the rates on the first quotation thereafter for each of the 9 selected currencies shall be used in the calculation. 3) If this is found that the arithmetic average of the percentage increase (+) or decrease(-)of the 9 selected currencies compared to the U.S. Dollar, computed in accordance with the principles of Attachment “B” hereto amounts to two (2) whole percentage points or more, the charter hire to be paid under this charter shall be increased/decreased by and equal percentage. The revised charter hire shall become effective from the first payment of charter hire due following such revision.

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4) When a revised charter hire has become effective, the provision of paragraphs 2 and 3 shall apply to allow for subsequent revisions of the charter hire in the calculation of the percentage points by which any revised charter hire shall be increased/decreased, the following rules shall be observed: a) The exchange Rates set out in Attachment “A” shall be replaced by the quotation for each of the 9 selected currencies applied to calculate the percentage points actually used to fix the revised charter hire in question: and b) The calculations shall be based on the increase/decrease in the rates of exchange subsequent to the date of such quotation. Any revised charter hire shall remain effective until a new charter hire fixed according to the provision of this paragraph has become effective. Attachments “A” and “B” have nor been reproduced hereunder. A “money basket” is composed, comprising nine countries and every three months the new value of the money is determined. For the nine countries it is assessed how much the currency has increased or decreased. The result is divided by nine and every three months the hire is adapted accordingly. 2.6.7.5 Hire Adjustment for Speed and Fuel Consumption When the charter party is signed, the Owner guarantees that his ship will sail at a minimum speed and that the fuel consumption will not exceed a maximum quantity (± 5%). This commitment on the part of the Owner is one of the “Charter Party Warranties” and in case of non compliance, the Charterer may not cancel the charter agreement but he will have the right to receive a compensation in the form of a “compensation in arrear” or a “adjustment of hire”. Suppose that the guaranteed speed in the charter party is represented by Vcp and the fuel consumption by Tcp. We assume that the vessel will make X equal voyages per year. a. Hire Adjustment for Speed The total sailed distance per year Dy = X x Dvoy (Dvoy = distance per voyage). The total number of hours to be sailed per year Hrscp = Dy / Vcp If the actual speed of the vessel Vact, is greater or smaller than the guaranteed speed Vcp indicated in the charter party, then the actual number of hours sailed Hrsact must be calculated as follows: Hrsact = Dy / Vact -

If Hrsact > hrscp then the Charterer suffered a loss; If Hrsact < hrscp then the Charterer made a profit.

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In the first case, the Owner will have to pay a “compensation is arrear” to the Charterer; in the second case, the Charterer will have to pay a compensation in arrear to the Owner expressed in ….$ per day. The number of days will be calculated as follows: Hrscp – Hrsact = Δ Hrs ΔHrs / 24 = number of days (too many or too little). b. Hire Adjustment for Fuel Consumption The guaranteed number of days at sea is calculated as follows: Dy / (Vcp x 24) = X cp days per year The guaranteed fuel consumption = Xcp d/j x Tcp / = Zcp T/year The actual consumption = Xact d/y x Tact /d = Zact T/year To be refunded: ΔZact - Zcp = Δ Z Tons x average price of fuel. Example The guaranteed speed and fuel consumption of a vessel is respectively 15 mph and 50 T per day. In one year the vessel has to make twenty equal voyages, each of 3600 miles. After one year, the Charterer states that the average speed was only 14 knots and that the vessel used 55 tons per day. The hire was equal to $ 350,00 per day and the average price of fuel $ 210,00 per ton. Hire Adjustment for Speed and Fuel Consumption Dy = 3,600 x 20 = 72,000 miles Vcp = 15 kn Hrscp

=

72,000 / 15 = 4,00 hrs

Vact = 14 kn Hrsact = 72,00 / 14 = 5,142.9 hrs ∆hrs = 4,800 - 5,142.9 = -342.9 (sailes too much) Number of days to repay = 342.9 / 24 = 14.29 days To refund by Owner: 14.29 x 350 = $ 5,001.5

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The guaranteed fuel consumption = (72,000 / 15 x 24) x 50 = 10,000 T The real fuel consumption = (72,000 / 14 x 24) x 55 = 11,785.7 T To be refunded by the Owner = (11,785.7 – 10,000) x 210 = $374,997 Note If the ship had been able to sail at the normal speed of 15 knots, then the compensation for fuel would have been equal to: 4,800/24 x 5 x 210 = $210,000 If the Owner can prove that the loss of speed or the extra fuel consumption were due to the bad quality of the fuel, then he would not have been indebted of any hire adjustment to the Charterer. 2.6.8 Period of hire and re-delivery of the Ship The ship can be hired for a number of calendar months or even for a number of years. "The Owners let, and the charterers hire the vessel for a period of the number of calendar months indicated in Box 14 ...." (BALTIME, Clause 1). A vessel can also be hired for one or several voyages but this is usually done under a “Trip Time Charter”. The period of hire runs from the delivery date until the re-delivery date. This is the planned period of the time charter agreement called “flat period”. (See Gorton, L., Ihre, R. en Sandevärn, A., Shipbroking and Chartering Practice, London, Lloyd's of London Press, 1980, 163.) The Owner has to deliver the vessel in a specific harbour (e.g. safe berth in a named port) or in any port in a safe area (e.g. Antwerp/Hamburg Range, inclusive). In that case, the Charterer has to name the specific harbour of re-delivery to the Owner at an agreed date. Generally, the Owner needs to notify the Charterer a number of days in advance of the correct date on which the vessel will be delivered. Sometimes this period can be as long as 30 days with additional notifications of 72, 48 and 24 hours before the actual delivery. Most time charters have a “Canceling Clause”: "Should the vessel not be delivered by the date/time stated in Box 10, the Charterers shall have the option to cancel the Charter Party without prejudice to any claims the Charterers may otherwise have on the Owners under the Charter Party. …….” (GENTIME, Clause 1, Period of Delivery).

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"If required by the Charterers, time shall not commence before ……… and should the vessel not be ready for delivery on or before …… but not later than ……. Hours, the Charterers shall have the option of canceling this Charter Party. Extension of Canceling If the Owners warrant ……….”.(NYPE, Clause 16, lines 205-218). Since in most cases it is difficult to determine the correct date of re-delivery, the “flat period” as well as the date of re-delivery are preceded by the word “about”. Often, the “flat period” or the re-delivery date are completed by the words: “±15 days in Charterers option”. The Charterer must plan his last voyage in such a way so that he can re-deliver the vessel at the agreed date. If the Charterer re-delivers the vessel before, the date of redelivery, the Owner may nor refuse the vessel. He only has right on a compensation if he can prove that owing to this, he suffered a loss. Consequently, the Owner must do everything he can to find a new employment for his vessel. Since, as mentioned above, it is usually difficult to determine the correct date of delivery, most time charter parties have a specific clause which deals with the last voyage of the vessel. In the BALTIME this is specified in the last part of Clause 7, R-delivery, lines 103-111: "Should the Vessel be ordered on a voyage by which the Charter period may be exceeded the Charterers shall have the use of the Vessel to enable them to complete the voyage, provided it could be reasonably calculated that the voyage would allow re-delivery about the time fixed for the termination of the Charter, but for any time exceeding the termination date the Charterers shall pay the market rate if higher than the rate stipulated herein". See also LINERTIME, Clause 4, Redelivery, (d) Last Voyage. It should be clearly underlined that this clause is only applicable if the Charterer calculated or planned his last voyage reasonably to allow him to re-deliver the vessel on the expected date of termination of the charter. If the Owner can demonstrate that the Charterer has been unreasonable in planning his last voyage, then the Owner can invoke breach of contract and not only claim the higher market rate but also demand an extra compensation. 2.6.9 Suspension of Hire (Off-Hire) Considering the high amount of hire and the variable operating costs which are paid in time charters, it is logic that due to a particular stoppage of the vessel, out of any fault or the will of the Charterer, the hire will be temporarily suspended. This is called “suspension of hire” or “off-hire”. Every time charter party specifies clearly in its printed clauses or in additional clauses when the Charterer may demand a suspension of hire or be off-hire. In the following cases the hire can or may be suspended:

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-

dry-docking; to maintain the efficiency of the vessel; deficiency of men; deficiency of Owners' stores; strike of Master, officers and crew; breakdown of machinery; winch breakdown; deviation or put back.

There is thus suspension of hire when the Charterer can not employ the vessel for the purpose for which he hired her. Nevertheless, the suspension must last for at least 24 consecutive hours: ".....and continuing for more than twenty four consecutive hours ...." (BALTIME, clause 11, lines 147-148). ".... the payment of hire overtime, if any, shall cease for the time thereby lost. ...." (NYPE, lines 225-226). According to the NYPE a suspension of hire is already possible after 2-3 hours. Sometimes, “….. consecutive hours or not ……..” can also be found. With regard to the dry-docking, the suspension and notice are specifically described. Normal maintenance is always for the ship but abnormal maintenance (e.g. due to the cargo) is for the Charterer’s account. The “Deviation Clause” has been at the base of a lot of disputes with regard to the beginning and the end of suspension. Therefore, a additional clause called “Putting Back Clause” is usually added to the time Charter agreement: "Should the vessel deviate or put back during a voyage for a reason which causes hire to be suspended under this Charter Party, hire shall cease to be payable from the commencement of such deviation until the time when the vessel is again ready to resume her service from a position not less favorable to the charterers than that at which the deviation commenced, provided always that due allowance shall be given for any distance made good towards the vessel's destination and any bunkers saved...." Suppose that the vessel is in position A and that she is bound for B. The vessel must however dry-dock in harbour C so that she has to deviate from A to C and later from C to B. See Figure 2.15 hereunder.

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Figure 2.15 The vessel will have made a deviation equal to (500 + 860) – 1,000 = 360 miles. If the vessel’s speed is equal to 15 knots, it will have been in “off-hire” for: 360’ / 15 x 24 = 1 day The Owner will also have to refund the Charterer for one day of fuel. If the Charterer has to shelter due to e.g. bad weather, then there is no suspension of hire. Deviation to save lives or property at sea is usually settled on the basis of 50/50 between the Owner and the Charterer. On the other hand, a deviation to disembark e.g. a sick crew member will be totally for Owner’s account. 2.6.10 Disputes Disputes about the implementation of the charter agreement are usually settled by arbitration (e.g. London or New York). (a) NEW YORK All disputes arising out of this contract shall be arbitrated at New York in the following manner, and subject to U.S. Law: One Arbitrator is to be appointed by each of the parties hereto and a third by the two so chosen. Their decision or that of any two of them shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the court. The Arbitrators shall be commercial men, conversant with shipping matters. Such Arbitration is to be conducted in accordance with the rules of the Society of Maritime Arbitrators Inc. For disputes where the total amount claimed by either party does not exceed US $ **

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the arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators Inc. (b) LONDON All disputes arising out of this contract shall be arbitrated at London and, unless the parties agree forthwith on a single Arbitrator, be referred to the final arbitrament of two Arbitrators carrying on business in London who shall be members of the Baltic Mercantile & Shipping Exchange and engaged in Shipping, one to be appointed by each of the parties, with power to such Arbitrators to appoint an Umpire. No award shall be questioned or invalidated on the ground that any of the Arbitrators is not qualified as above, unless objection to his action be taken before the award is made. Any dispute arising hereunder shall be governed by English Law. For disputes where the total amount claimed by either party does not exceed US $ ** the arbitration shall be conducted in accordance with the Small Claims Procedure of the London Maritime Arbitrators Association. (NYPE, Clause 45, Arbitration.) *Delete para (a) or (b) as appropriate ** Where no figure is supplied in the blank space this provision only shall be void but the other provisions of this clause shall have full force and remain in effect. If mutually agreed, clauses to are fully incorporated in this Charter Party.

, both inclusive, as attached hereto

See also BALTIME, Clause 22, Dispute Resolution and GENTIME, Clause 22, Law and Arbitration. Z.6.11 Laying-up the Vessel In the sometimes very capricious freight markets, it can be more advantageous to the Time Charterer to lay up the ship. This is very frequent with VLCC’s and ULCC’s, when the freights received do not balance against the hire and the variable operating costs. Laying up - At the written request of the Charterers, the Owners shall at any time provide an estimate of any economies which may be possible in the event of layingup the Vessel. The Charterers shall then have the right to order the laying-up of the Vessel at any time and for any period of time at a safe berth or safe place in their option, and in the event of such laying-up the Owners shall promptly take reasonable steps to effect all the economies in operating costs. The laying-up port or place and laid-up arrangements shall be subject to approval by the Owners' insurers. Laying-up preparation and reactivation cost, and all expenses incurred shall be for the Charterers' account. The Charterers shall give sufficient notice of their intention in this respect to enable the Owners to make necessary arrangements for decommissioning and recommissioning. The Owners must give prompt credit to

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the Charterers for all economies achieved. (GENTIME, Clause 15, Charterers’ Requirements, Par. L, Laying up.) Under the chartering of ordinary cargo vessels (e.g. BALTIME and GENTIME) the “Laying up Clause” is only found in an additional clause.

2.7 WORKED-OUT TIME CHARTERPARTY Worked-out Baltime Charterparty. (See Figure 2.12, page 115)